EUR/JPY hits weekly high below 138.00 as Japan returns from vacation

  • EUR/JPY rises for the fourth straight day as high yields weigh on the yen during high markets.
  • Downbeat German data and strong Tokyo CPI fail to stop buyers.
  • US jobs report, risk catalysts will be crucial for near-term guidance.

EUR/JPY resumes offers to refresh the intraday high around 137.60, approaching the weekly high in Friday’s active Asian session.

The cross currency pair’s latest gains could be tied to firmer US Treasury yields, which typically weigh on Yen prices. The divergence in monetary policy between the European Central Bank (ECB) and the Bank of Japan (BOJ) is also likely to have favored EUR/JPY buyers.

It should be noted that EUR/JPY advances recently ignored strong Tokyo Consumer Price Index (CPI) data for April, 2.5% YoY vs. 1.9% expected and 1.3% previously. German factory order disappointment also likely challenged the pair’s upside, but didn’t. Key industrial activity data from the European powerhouse fell the most in five months with a reading of -4.7% the previous day, down from -1.1% expected and revised up from -0.8%.

While depicting the mood, the S&P 500 Futures fell 0.33% while 10-year US Treasury yields rose five basis points (bps) to 3.07% at the latest.

Going forward, a light calendar in Europe and Japan may not disappoint EUR/JPY momentum traders as the US jobs report and risk catalysts are in full swing to move the markets.

Also Read: The Bond Massacre Continues and the Fed’s Dove Rally is Already Failing

Technical analysis

Unless it breaks back below the 21-DMA level around 137.00, EUR/JPY remains headed for a late April low near 138.25-30.